The well-publicized woes in the business of subprime mortgages -- a surge in foreclosures, turmoil in the stock market -- are raising a big question: Are regulators partly to blame?

Federal regulators over the past decade issued rules to tighten standards for making loans to borrowers with blemished credit or low incomes. Yet standards still declined and the volume of loans surged in the past two years.

One reason: Changes in the lending business and financial markets have moved large swaths of subprime lending from traditional banks to companies outside the jurisdiction of federal banking regulators. In 2005, 52% of subprime mortgages were originated by companies with no federal supervision, primarily mortgage brokers and stand-alone finance companies.

Another 25% were made by finance companies that are units of bank-holding companies and thus indirectly supervised by the Federal Reserve; and 23% by regulated banks and thrifts.

1 Comments:

Anonymous said...

Look at the letter that Dodd sent to Bernanke. He asks for Bernanke's response in electronic format in WordPerfect. Are they still in business? Everyone use's MS Word today or if the Government had their act toget a free compatable program to Word. Our Government is a joke, complete idiots who waste money on items that are not compatible with with business uses today.

Then he asks Bernanke to print 73 copies. What a Fu**ink idiot. Every hear of a pdf and email. Or, why should Bernanke print them, Dodd is asking for them.

No wonder our Nation is going down the toilet. We need to get rid of every one of these incompetent assh**es. Politicians are a joke.